10 December 2010
1. Can we pay to a non executive director for his services other than as a director? any sum as professional charges etc at fixed/changing rates?
2. what if above is Rs10,000/- pm
3.is it contrary - to show as non executive in form 32 and pay him (though other than director services)
5. does deducting tds and showing a non executive director in 194j has got any problems? either for him or a deductor company
As per section 309(1) of the Companies Act, 1956 Remuneration of Directors includes payment for services rendered by a Director in any other capacity.
If the services rendered are of a professional nature the same shall not be included in the Director's remuneration provided:
1. Services are of professional nature,and 2. In the opinion of the Central Government, the Director concerned possesses the relevant qualifications and expertise to render such professional services.
However, the provisions of section 309 are not applicable to an independent private company.
2. As per section 314 of the Companies Act, 1956 if the Director of the Company receives anything over and above his remuneration as the Director of the Company, from the Company whether by way of salary, fees, commission, perquisites, allowances, right to occupy rent free premises for residential purposes etc. he is said to hold an office or place of profit in the Company or its subsidiary Company as the case may be.
Hence, if the Director is holding an office or place of profit in the Company carrying a monthly remuneration of Rs.10,000 or more, consent of the members by way of a Special Resolution has to be obtained in the General Meeting of the Company.
10 December 2010
thanks mr udit for deatiled reply just to add
We have made a mistake for 2 months. We have actaully paid professional charges to a person, who was working for us. Later the directors in board meeting decided to take him to the board and but as a non-executive director from mid of June. However we continued to make the payment for July and Aug. Is it okay to show this as an item in the next ADM (ie for Sep 2011).
our main concern is we have shown this TDS return as Professional charges (NOT SALARY)
CAclubindia
